An annual fire-prevention fee that is unpopular with some rural property owners is headed back before the state Legislature, as Gov. Jerry Brown proposes to expand its use, and opponents try to kill it.

The fee was imposed for the first time last year and helps fund the state's firefighting agency. Legislation to repeal or provide exemptions to the fee is expected to be introduced by lawmakers who represent rural areas, and the governor is considering a move to turn the fee into a tax.

North Coast Assemblyman Wes Chesbro, D-Arcata, said in an interview this week that he supports several bills calling for appeal of the fee.

"We're exploring a variety of alternatives," he said. "There's conversations going on between legislators and the governor."

Chesbro said money budgeted to the fire prevention program must be replaced somehow, and that he's seeking a "fair alternative" to the fire fee. At this point, he said, there are no concrete solutions.

"The legislative process is gonna start gaining steam in the next few weeks," he said.

The fee, made payable to the Department of Forestry and Fire Protection, or Cal Fire, is based on how many "habitable structures" are on a property, at a rate of $150 per structure. Residents that already pay a tax to a local fire department receive a $35 discount.

Cal Fire spokesman Dennis Mathisen said he's aware of six bills in the legislation process that could affect the fire fee.

"Three are simple repeal bills," he said. "They just appeal the previous legislation and repeal the fee all together."

Other bills create exemptions for owners of property within existing fire agencies or for owners whose annual income does not exceed 200 percent of the poverty level.

"The largest issue is the effect it could have and will have on the smaller departments," he said. "If you're forced to pay that fee, you may also not be able to support your local fire department."

Winburn and Chesbro believe the fee is actually a tax -- which would have required a two-thirds vote in the Legislature, not the simple majority it received. Chesbro said he made two attempts in the state legislature to repeal the bill, and one to reform it. Both were unsuccessful, he said, because of a looming state budget deficit.

"Now that Prop 30 passed, I think the governor is breathing a little easier," Winburn said. "It doesn't surprise me that he's looking at other options."

Mathisen said a proposal in the governor's budget includes using fee money to make sure that "fire hazard severity zones" are included in county and municipality general plans.

"The (State Responsibility Area) butts up against local jurisdictions," he said. "It provides some funding for us to assist local governments."

The Howard Jarvis Taxpayers Association is suing the state on grounds that the fee is actually a tax and is hoping to repeal the law.

The governor also wants to amend the law to turn the fee into a tax. The two-thirds vote of the Legislature needed to officially turn the fee into a tax, is unlikely, said Chesbro.

"He's going to have a very hard time getting a two-thirds vote," Chesbro said. "It's hoped that would cause him to reconsider the fire fee."

The fee has also run into two new hurdles in recent weeks that are feeding criticism and uncertainty about its future.

First came a disclosure that the Department of Forestry and Fire Protection funneled money from wildfire damage settlements into a special account instead of the state treasury.

That revelation was followed by an opinion from the Legislature's legal counsel that the department is improperly using some of the new fire fee revenue to collect damages from those who maliciously or accidentally start fires, instead of its intended purpose.

The news prompted a state audit, led Republican lawmakers to call for a federal investigation and bolstered the hopes of an anti-tax organization that is suing over the way the fee was enacted.

Department spokesman Daniel Berlant said there was no intent to hide $3.6 million in wildfire settlement money that was placed in an account kept by the California District Attorneys Association. Most of the money was used to buy digital cameras, radio scanners and other equipment, and for conferences to train county prosecutors and fire investigators.

The department says it provided documents that show state officials were told about the fund, unlike the parks department, where officials deliberately hid $20 million from lawmakers and the governor.

A February 2010 email to the Department of Finance, state Assembly and Bureau of State Audits has an attached memo outlining 10 financial and management issues facing the firefighting agency. The Wildland Fire Investigation Training and Equipment Fund at the center of the dispute is addressed in four paragraphs on page seven of the 10-page memo.

A 26-page internal audit of the account also was posted on a public website in 2009, four years after the fund was created.

Finance Department spokesman H.D. Palmer said the existence of the fund was not widely known, and officials are now auditing the account.

Republican lawmakers sent Brown a letter two weeks ago demanding that he ask a federal prosecutor to investigate. The administration is still working on a response.

"It damages the credibility of the agency," said Howard Jarvis Taxpayers Association President Jon Coupal, whose organization is suing to overturn the new property fee. "This smacks of the same issues that tarnished the parks department."

As revenue from the new fee on rural property owners comes in, the state fire department is using a portion of it to pay for 24 employees who collect damages from those who start wildland fires. Brown has proposed using $3.7 million from the fees to fund that program permanently, but the legality of that move also is being challenged.

The nonpartisan Office of Legislative Counsel concluded that using the rural property fee to investigate and prosecute those who start wildfires violates the state constitution because there is no direct benefit to the property owners paying it. The fee is assessed on nearly 800,000 property owners.

Mathisen said Cal Fire is preparing the new billing cycle, which will be sent to each county in alphabetical order.

"Fiscal year '12-'13 bills will begin to be sent out this spring -- sometime in April," he said.